CERC urges transfer of IEPF to Sebi

The Ahmedabad-based consumer rights organisation, Consumer Education and Research Centre (CERC), has recently urged Union Finance Minister P Chidambaram to transfer the Investors' Education and Protection Fund (IEPF) from the Department of Company Affairs (DCA) to the Securities and Exchange Board of India (Sebi).

The fund was created from the unclaimed and unpaid dividend amount, application money and deposits with companies lying unutilised, CERC pointed out and added that a joint parliamentary committee (JPC) recommended the creation of such a fund to promote investor education. The fund was set up under provisions of the Companies Act 1999.

A committee set up under the chairmanship of N L Mitra in its report earlier suggested that since Sebi had been constituted specially to protect the interest of the investors, the fund should be administered by Sebi.

The committee had recommended that Sec 205 C of the Companies Act be repealed and similar changes be incorporated in the Sebi Act to transfer the fund, CERC added in its letter to the finance minister.

But the recommendations of the committee have not been implemented properly yet, it has been alleged.

Both the JPC and the Mitra Committee lauded Sebi's efforts such as establishing a risk management system, circuit breakers, dematerialisation and establishment of clearing houses, settlement guarantee funds in stock exchanges to check settlement failure, etc to protect investors.

Sebi's step to establish investors' protection funds in the stock exchanges, increasing the disclosure requirements, introducing disclosures of quarterly financial results of companies and strengthening the accounting standards of the companies by reporting deferred tax liability, etc has boosted investors' confidence, CERC added.

Sebi also involved non-profit citizen's groups such as investors protection associations in its various activities to promote and protect investors' interest.

The regulator organised meetings of investors' associations at regular intervals and gave representation to various investors' associations on its various committees, such as Primary Capital Market Advisory Committee, Secondary Capital Market Advisory Committee, Demat Committee, etc.

"Thus, Sebi is a more appropriate authority to manage the fund and hence the plea," CERC said. CERC has also requested the Members of Parliament from Gujarat to take up the issue with the finance minister," added a spokesperson of CERC here on Friday.